Trout case may have impact on future of Ali Act litigation

January 5, 2018

Maybe the most important case as it relates to the expansion of the Ali Act may involve boxer Austin Trout and his current lawsuit against the World Boxing Organization in Federal Court in Puerto Rico.

Last month, the WBO is moving to dismiss the case and invoke the arbitration clause which was a part of his promotional contract with the company.  Trout had filed the lawsuit which includes claims for violation of the Ali Act in boxing.  The WBO argues that Trout agreed to the contract and should be held to its arbitration clause and that he forfeited his right to a jury trial.  Trout states that the Ali Act is federal law and that it is not governed by the WBO Promotional contract.  His attorneys also claim that that the arbitration would be unreasonable or unjust.  The other overarching argument is that the WBO has waived its right to compel arbitration by litigating the case.

The case, originally filed in state court in New Mexico where Trout resides, has been around for 2 years but due to jurisdictional fights, nothing substantive has happened in the case.  Due to the hurricane that hit the island, there was an additional delay.

You can find the background of the lawsuit in our September 2017 post which includes copies of the Complaint and Amended Complaint.

Payout Perspective:

There’s no timeline as to when the Court might render a ruling on the WBO’s Motion to Dismiss.  But, the overarching issue for fans of the Ali Act Expansion is whether an organization can contract out of the lawsuit.  This means that even if there is a federal law which grants a plaintiff a right to sue, the fact that there is an arbitration clause in the contract may render the claim moot as to a trial and it may (or may not) go forward in arbitration.  There are several layers to consider here as to whether the Ali Act is something that was contemplated as part of a contractual dispute that would go to arbitration.  If it is a part of the contract and the arbitration clause is valid, it would make it easier for organizations to litigate claims.  On the other hand, I have been an advocate for arbitration and/or mediation to resolve Ali Act violations due to the fact that litigation is long and expensive.  You could also bifurcate the claims as to taking the Ali Act to trial while arbitrating any other claims.  The other issue is who would be the trier of fact (i.e., jury, judge or arbitrator).  Also, who would be the arbitrator (a panel or just one individual).  Thinking ahead, if an expansion to the Ali Act takes place, it would be interesting to see if the UFC amends its fighter contracts to institute clauses to limit them to binding arbitration similar to the UFC Anti-Doping Program.  MMA Payout will keep you apprised of this lawsuit.

Zuffa and Dana White file opposition to Mark Hunt’s inclusion of Fight Night Removal in his complaint

January 3, 2018

Zuffa and Dana White have responded to Mark Hunt’s Motion to Supplement his First Amended Complaint and request the court deny the motion.  While the rule is liberal for parties to amend and supplement pleadings, Zuffa and White argue that Hunt’s supplementation of information here would be “futile.”

Hunt filed the motion so that it may include factual information related to his claim that he was unfairly taken off of UFC Fight Night 121.  The UFC and White argue that there was no choice but to remove him from the card due to his op-ed piece claiming physical maladies suffered from years of fighting.  “Faced with such concerning statements from a fighter about his neurological health, Zuffa had no choice but to pull Hunt from the upcoming fight card until it could assure itself, athletic commission regulators, and the public that Hunt was, in fact, medically fit to fight.”

Zuffa and the UFC claim that the new allegations from Hunt have nothing to add to his claims.  Defendants, as you might expect, believe that the claims are defective and supplementing it with more facts would not add or bolster the claim.

Despite filing the lawsuit, the UFC brings up that Hunt has been paid “more than $1.5 million” for competing in two bouts.  Thus, the inference that there is no correlation between the suit and being taken off of the scheduled bout.  Specifically, it has nothing to add to the RICO claims.  “Hunt’s new allegations about being wrongfully removed from UFC Fight Night 121 are not even premised on his underlying RICO allegations that Zuffa had engaged in a pattern and scheme to allow doping fighters to compete against clean fighters.   They [the proposed supplemental facts] are, instead, premised on the entirely new theory that Zuffa retaliated against him for having filed the instant lawsuit.”

The UFC also argues that the Breach of Contract would not be impacted as the Promotional Agreement limits the type of damages that are recoverable.  Even though Hunt claims $100,000 in damages for his training camp.

   UFC Opposition to Motion to Supplement by JASONCRUZ206 on Scribd

Payout Perspective:

Brock Lesnar’s attorney has not filed an opposition or joined (meaning Lesnar can just add their name to the motion) this one.  The opposition is artfully pled and poses very good arguments but its unlikely that the court will deny Hunt’s motion to supplement its First Amended Complaint.  While there are cases that will support the argument for denying supplemental facts, the amending and supplementing of pleadings are liberal to ensure that the litigation of the case is complete.  It also prevents unnecessary appeals.  Moreover, the court knows that defendants will get another shot at dismissing the supplementation of information in the First Amended Complaint when it files its Motion to Dismiss (or at the summary judgment stage if it is not defeated initially).  MMA Payout will keep you posted.

MPO Year in Review: No. 4 Ali Act Expansion moving forward?

December 31, 2017

Push for the expansion of the Muhammad Ali Boxing Reform Act to combat sports continued this year with another Congressional Subcommittee Hearing.  This time, the questions were pointed specifically about the impact the Ali Act might have on MMA.

In December, Randy Couture, Dr. Kristen Dams-O’Connor, Pennsylvania Athletic Director Greg Sirb and the UFC’s Marc Ratner testified at the hearing.  The most interesting exchange came from the bill’s sponsor Markwayne Mullin and Ratner.  Taking on the appearance of a contentious cross-examination, Ratner was grilled about the UFC and the rankings system.  He also questioned the matchups of certain events including why the UFC allowed Georges St Pierre to get a title shot against Michael Bisping despite coming back from a long absence.

In addition to the hearing, Bellator filed a Statement supporting the Ali Act.  Jon Fitch also filed a statement.  He also authored an op-ed in the Washington Examiner the same day as the hearing.  On the other end, Marc Ratner provided a statement opposing the Ali Act expansion.

Despite talk that Conor McGregor would be willing to testify before Congress, that rumor did not come to fruition.

We will see if there is enough congressional support for Mullin to bring it to a vote before the House or whether there will be a need for more education on the Act before it can move forward.  Thus far, there are 58 co-sponsors for the bill.

MPO Year in Review: No. 5 Mark Hunt sues the UFC, Dana White and Brock Lesnar

December 29, 2017

In January, Mark Hunt filed a lawsuit against Zuffa, Dana White and Brock Lesnar from his loss at UFC 200 to the returning WWE star and subsequent revelation that Lesnar tested positive for a banned substance on the UFC anti-doping policy.

The lawsuit, filed in federal court in Nevada, was unique as it included allegations of civil violations of the RICO Act as well as a claim for negligence and breach of contract.  In most instances, a plaintiff cannot claim both tort damages and from those arising for a contract.  Here, Hunt was claiming because the UFC allowed Lesnar to fight with the knowledge that he may have been taking steroids, any injury arising from the fight should be treated as a personal injury.

Serving Lesnar the lawsuit, a requisite in civil litigation, was a difficult task and he was not served until March.  Howard Jacobs represents Lesnar in this lawsuit.

In May, the Court heard the defendants’ Motion to Dismiss.  We took a deep dive into the hearing as the transcript was made available to the public.  The Court allowed the lawsuit to stand but left it open for the plaintiffs to file an amended complaint as it highlighted at the hearing, that certain claims such as the RICO claims were speculative.

Yet, in Hunt’s First Amended Complaint, he included the RICO cause of action.  As with the first Complaint, The Defendant’s filed another Motion to Dismiss, this time, to dismiss the First Amended Complaint.

The Defendants had hoped that they could stay discovery pending the result from the Court of the Motion to Dismiss the First Amended Complaint.  However, the Court has ordered that discovery may commence related to all of Hunt’s claims except his RICO allegations.

The plot to this lawsuit continued as Hunt fought for the company he was suing in March of this year.  He lost via KO at UFC 209 to Alistair Overeem.  This past fall, he made more news when he wrote an article for a web site where he admitted memory loss and slurring his words.  The UFC took Hunt off the UFC Fight Night 121 card in November when it learned of the article.  This incensed Hunt but White stood his ground in citing that he needed to be checked out to be cleared to fight.

Hunt recently requested that he supplement his First Amended Complaint to include facts about how he believes he was unjustly taken off of UFC Fight Night 121 in Australia.  Likely, the UFC will deny allegations of wrongdoing and will cite taking him off the card as a precautionary measure and they were willing to have him checked out to ensure he was healthy enough to fight.

This is a unique lawsuit that has not trial date and thus the ending is open.  The curious thing is that Hunt remains a fighter for the company and one of the highest paid non-champions on the roster.  It will be interesting to see what information might be pulled from discovery that would put the UFC in a false light but I am sure that what items might be pulled will yield to a settlement between the parties.  If not, we could be heading toward a very contentious court battle.

MPO Year in Review: No. 8 Bellator among the parties pulled into UFC Antitrust Lawsuit

December 28, 2017

Bellator MMA found itself a part of the UFC Antitrust lawsuit as the two companies were opposing sides in a discovery dispute.  Bellator sued the UFC in Los Angeles, but the Court determined that the dispute should occur in the Vegas court handling the case between former fighters and the UFC.

Prior to the filing of the lawsuit in February, Bellator claimed that it had “produced in excess of two thousand pages of responsive documents.”  Yet, the UFC argued that it needed more which included payouts for Bellator fighters, contracts and financial information.

Bellator Motion to Quash Subpoena by JASONCRUZ206 on Scribd

Zuffa Opposition to Bellator Motion to Quash by JASONCRUZ206 on Scribd

The Vegas court issued a ruling in June.  Some of the findings are below:

Bellator was ordered to produce:

  1. A random sample of at least 20 percent of fighters under contract with Bellator between January 1, 2010 and the present. This will include any “amendments, modifications, side letters, or extensions that may exist with respect to any contract that is produced…”
  2. Bellator will produced “Anonymized contracts” with a unique identifier although identifying information “may be redacted.”
  3. The contracts “shall include the fighter’s gender, weight class, number of fights during term of agreements and any compensation to be paid.
  4. The Court limited and modified Bellator’s request for production to the following
    1. A list of all MMA events it promoted or co-promoted from January 1, 2010 through the present.
    2. An unaudited profit and loss statement through the quarter ending March 31, 2017 which will include Revenue, Expenses, Operating Income and Net Income.

In addition, Matt Hume, had a similar discovery issue in which the Plaintiffs sought information from OneFC (Hume is an executive for the company).  A lawsuit in Washington state ensued in which a motion to compel the documents of Hume in July included a request for attorney fees in the amount of $21,000.  Similar to the Bellator lawsuit, the federal magistrate dealing with the dispute decided to kick the case to Vegas for the trial court to handle.  The Plaintiffs demanded certain documents from Hume’s involvement with OneFC as well as to take his deposition.

Motion to Compel Depo of Matt Hume by JASONCRUZ206 on Scribd

Plaintiffs’ Opposition to Motion to Quash Hume Subpoena by JASONCRUZ206 on Scribd

The Washington state court decided that it did not want to intervene in the lawsuit and kicked the case to Vegas.

These were not the only two discovery issues in this case.  Zinkin Entertainment was ordered to produce documents related to the representation of its fighters.  Top Rank also came to terms with the UFC in the lawsuit over discovery.

Zuffa was ordered to hand over a study on fighter pay.

In addition, Zuffa filed a lawsuit to dismiss the claims of plaintiff Nathan Quarry due to statute of limitations.  The Court has yet to issue an order on the motion.

The UFC Antitrust lawsuit was a “discovery year” for the case as depositions were taken and fact discovery took over most of the year.  As expected, there were fights over the discovery of documents which seemed to have resolved.  In 2018, we will see the expert discovery phase start as the wheels of justice move slow on the civil side.

MPO Year in Review – South Korean court hands down sentence to former UFC WW for role in attempted fight fixing

December 26, 2017

Former UFC Fighter Tae Hyun Bang was sentenced to 10 months for his part in a fight fixing scheme that took place at UFC Fight Night 79 in November 2015.

The scheme had Bang taking money from an organized group to throw a fight against Leo Kuntz.  Bang was a favorite in the fight but after a vast swing in odds, the UFC put both fighters on notice of any improprieties prior to the fight.

According to the Seoul Central District Court, Bang was given $92,160 in U.S. dollars for his role.  The brokers who gave him the money were given jail sentences as well.

According to the Court, match fixing damages the credibility of the sport and had a bad effect on the country’s credibility.  Bang took the bribe and then bet roughly half of the money he received on Kuntz.  He was to lose the first two rounds of their three-round bout.  Thus, ensuing victory for Kuntz.

Bang ended up winning the fight via split decision. He had claimed he had not known of any scheme to fix the fight but received death threats due to his win.

While the fight fixing issue did not receive a lot of headlines in North America, fight fixing is a serious issue and could debilitate the sport.  The UFC advertises odds and uses them all the time when setting up storylines for fights.  The need to ensure credibility of the sport is vital.  There has been no huge gambling issues since this incident but with fighters on the prelim cards making small purse amounts, the temptation to take money is out there.  The company must still keep an eye out for those that might influence fighters to fix a fight.

MPO Year in Review – Alliance MMA sued by investors

December 24, 2017

Alliance MMA, the publicly traded MMA organization that launched in late 2016, was sued by shareholders citing violations of securities law for alleged misrepresentation of information.

A class action suit is sought and there were efforts by multiple companies to seek out aggrieved shareholders.  Two lawsuits were filed in New York although one was later dismissed under the belief that the lawsuit originally filed would serve as the lawsuit that potential plaintiffs could join as part of a class action.

The lawsuit arises out of an amendment made by the company which trades on the NASDAQ.  In an 8-K filing made by the company last month, it stated that financial statements previously made for the nine months ended September 30, 2016 included in the Company’s Form 10-Q, three months ending June 30, 2016 and six months ending June 30, 2016 could no longer be relied upon because of an error in recognizing as compensation transfers of common stock by an affiliate of the Company to “individuals who were at the time of transfer, or subsequently became, officers, directors or consultants of the Company.”

Alliance MMA CEO, Paul Danner addressed the lawsuit. It has retained a law firm that will likely bring a motion to dismiss the lawsuit.

Alliance MMA lawsuit by JASONCRUZ206 on Scribd

The basic issue was an apparent error with the transfer of stock and the need to indicate the issue.  This sparked the lawsuit.

Regardless of the lawsuit, a concern for shareholders is that the stock price has tumbled since its initial launch.  The 52-week high as of this writing is $3.99 with its low at $0.85.  At closing on Friday, December 22nd, it traded at $1.20 per share.  The stock price is down approximately 65% from its IPO price.

There is also the issue raised as to whether Alliance MMA overstated its operating margin.  Alliance MMA denies it did but there is some speculation.

The company continued growth this year acquiring several regional promotions for its stable.  We shall see what 2018 brings for the company.

MPO Year in Review – Good sues vitamin maker after failed USADA test

December 22, 2017

UFC Fighter Lyman Good sued vitamin maker and the store that sold it as a result of having a USADA test being flagged.  Good was suspended by USADA and pulled from UFC 205 in his native New York.

Via our post in October:

The target supplement is Anavite according to the lawsuit which was filed in New York by his attorney, David Fish.

Good was suspended for violating the UFC Anti-Doping Policy after he failed a random test.  As part of the process, he learned that the drug that may have caused the failed test was Anavite.

Good is requesting restitution, damages, injunctive and other equitable relief.  Good believes that Gaspari Nutrition misbranded the products as “dietary supplements” to defraud consumers into the believing it had superior “dietary supplements.”

Vitamin Shoppe was sued for (among other things) breach of warranty for selling the products “despite assurances of product quality and control.”  The store claims to have safety measures to ensure that the products its sells are of quality.  Good claims that it has failed to provide such safeguards based on the product he purchased from the store.

Upon learning of the flagged USADA test, Good had provided USADA with unopened packages of Anavite to examine at a lab regarding the contents.  The results confirmed Andro in the product.  Andro is a banned substance per the UFC Anti-Doping Policy and considered a steroid.  Thus, Good has sued the supplement maker, its owners and the store that sold the product.  The lawsuit indicates the harmful effects of steroids and the fact that Andro is such a substance

This is a first of its kind lawsuit under the UFC Anti-Doping Policy and perhaps MMA.  Good can show he was damaged due to the fact that he relied on the representation of the label that Anavite did not contain Andro as it was not on its label as a content and was listed as a “Dietary Supplement.”  He is making a claim against Vitamin Shoppe since it claims to have superior knowledge of these products and should have investigated this product.  The defendants will likely claim a tainted product and that overall, its products do not contain the banned substance.  Moreover, it will claim that there are no damages incurred by Good despite serving a six month sentence.

In products liability cases (lawsuits where the claim is that a product is defective), there is a higher standard on the manufacturer or seller to ensure that the user is not harmed.  In this instance, one could argue Good was not harmed in the sense of physical injury.  He was harmed since he had to ensure he did not ingest a banned substance per the UFC Anti-Doping Policy.  This will make a very interesting case as it continues.  MMA Payout will continue to follow.

The lawsuit remains in its infancy stages although we might expect a motion to dismiss the case by the defendants and/or a denial of the allegations.  One would think that this lawsuit will be watched by other fighters that may have flagged tests due to using an over the counter supplement that was “misbranded.”

Former fighter threatens to sue PFL

December 20, 2017

MMA Fighting reports that former Professional Fighter’s League fighter Bruce Boyington is threatening legal action after he was informed by the PFL that he would not be included in the company’s 12-man lightweight division 2018 season.

Boyington is 14-11 and has lost his last 3 fights.  He claims to have had a four-fight contract with the predecessor entity, World Series of Fighting.  But, he’s being released having just fought one fight in the WSOF.  He believes that he was going to be a part of the PFL and turned down other fights and opportunities as he was waiting for the upcoming 2018 season.

This past year, the World Series of Fighting was purchased by new investors and promised a new format which would ensure that fighters would fight and be paid a salary.

Boyington took to social media to advocate his case against PFL.

In response, Ray Sefo addressed the issue:

Payout Perspective: 

There are two sides to every story.  Does Boyington have a case?  We are not sure because you’d have to look at his contract with the company.  One would think that he was classified as an independent contractor and as a result it’s likely he could be released from his contract at any time. Boyington notes that he relied upon the contract and turned down other offers to fight to stick with the PFL (these are his damages he’d claim in a lawsuit). But, Sefo seems to state that even if there was some duty to give a reason for his contract to be terminated, losing 3 in a row would be a valid one.  The underlying issue of the state of the PFL is compelling since the reboot of the company was to provide a fresh start and offer fighters an opportunity with fights and steady pay.  We will see if PFL can come through in 2018.

Hunt lawyers seek to include facts about UFC pulling him from Fight Night 121 in lawsuit

December 18, 2017

On Friday, Mark Hunt’s lawyer filed a motion to supplement its First Amended Complaint according to court papers.  The supplemented information appears to include his “unilateral removal (for pretextual reasons) from UFC’s November 2017 “UFC Fight Night 121” card.  Hunt claim’s he “incurred in excess of $100,000.00 in damages for the cost of his pre-fight training camp and related expenses, in addition to the lost fight purse.”

Hunt is requesting the supplement to add factual allegations supporting existing claims.  The supplementation may give rise to further legal wranglings from Zuffa, Dana Whtie and Brock Lesnar since the three have motions to dismiss Hunt’s First Amended Complaint.  Essentially, the defendants may argue that supplementing the First Amended Complaint with additional factual content impacts the existing motion to dismiss which is pending Court decision.

The removal from the recent Fight Night is the result of Hunt’s article in an Australian web site that he had memory loss and slurred speech related to fighting.  After the article was released, the UFC took him off of UFC Fight Night 121 in Australia due to concerns about his health.  The UFC indicated that Hunt could be checked out at the Lou Ruvo Brain Center but Hunt refused according to Dana White.  Hunt stated that he had the tests done in Sydney instead of Las Vegas where the brain center is located.  According to Hunt, the tests were negative.

Mark Hunt’s Motion to Supplement First Amended Complaint by JASONCRUZ206 on Scribd

Proposed Supplemental First Amended Complaint by JASONCRUZ206 on Scribd

 

Payout Perspective:

The supplemented information to his First Amended Complaint is a procedural matter which Zuffa has the opportunity to object to the supplemented complaint.  The additional information that Hunt would like included in his First Amended Complaint would bolster the alleged claim under the RICO Act since one of the requisites deals with a scheme over interstate lines via “wire, radio or television.”  If the Court allows the supplemental information, you’d expect Zuffa to argue that it has to retool its Motion to Dismiss the First Amended Complaint to address the new facts.  MMA Payout will keep you posted.

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